Credit and Prepaid Card News
The latest news on the credit card and prepaid card industry from the Center for Responsible Lending.
- T-Mobile Enters Prepaid Card Market
Washington Post 22 Jan 2014
T-Mobile introduced a prepaid card on Jan. 22, following other retailers like Wal-Mart, Walgreens, and Target into the banking world.
- 'No-Interest-Now' Deals Can Be Risky
USA Today 26 Dec 2013
Many shoppers can save money in the long run by avoiding zero-percent, "no-interest-now" deals during the busy holiday season. Odysseas Papadimitriou, founder and CEO of the personal finance websites CardHub and WalletHub, notes that deferred-interest-rate deals are an extremely popular offering right now. Consumer watchdogs, however, warn that there are many ways for shoppers to end up paying more than what they anticipated under these deals.
- Amex Fined After Staff Misled Customers
Financial Times 25 Dec 2013
American Express (Amex) has agreed to $75.7 million in fines and reimbursements to customers after regulators discovered that its sales staff misled customers about the benefits of many credit card insurance products.
- Signature Cards More Prone to Fraud
Fox Business 20 Dec 2013
Credit counselors say credit card cash advances should only be a last resort, and their advice is backed by a new CreditCards.com survey of cash advance rates and fees on the top 100 credit cards.
- Consumer Bureau Hits Medical Financing Company CareCredit With $34.1 Million Action
Washington Post 11 Dec 2013
The Consumer Financial Protection Bureau (CFPB) has ordered medical financing company CareCredit, an arm of General Electric, to pay $34.1 million for providing inadequate disclosures and using deceptive enrollment practices. The funds will help reimburse more than 1.2 million CareCredit customers who incurred credit card penalties and fees since 2009.
- How Strict Limits on Debit-Card Fees Created More Free Checking
Bloomberg Businessweek 11 Dec 2013
Five years after the financial crisis, researchers now have enough data to better understand how reforms to consumer finance have produced intended and unintended consequences. A recent paper found that the 2009 CARD Act, which banned some profitable but abusive credit card practices, has saved consumers $20.8 billion a year. Banks argued that it also tightened access to credit, but a new analysis from the Federal Reserve Bank of Kansas City suggests that caps on swipe fees for debit cards have widened consumer access to free checking accounts.
- Credit Card Delinquency Rate Declines
Central Valley Business Times (CA) 20 Nov 2013
Figures compiled by TransUnion LLC show that both the credit card delinquency rate and the average credit card debt per borrower declined on a annual basis during the third quarter. Card delinquency fell to 1.36 percent, down 14 basis points from 1.50 percent a year earlier.
- Credit-Card Application Rules Eased
Wall Street Journal 11 Nov 2013
The Consumer Financial Protection Bureau (CFPB) on Nov. 4 removed a provision, established under the Credit Card Accountability Responsibility and Disclosure Act, that had blocked many people with no individual income from applying for credit. The restriction was intended to keep young adults out of credit card debt, but the CFPB says it inadvertently led to "otherwise creditworthy" applicants being turned away.
- Card Act Cleared Up Credit Cards’ Hidden Costs
New York Times 08 Nov 2013
The 2009 Credit Card Accountability Responsibility and Disclosure Act, better known as the Card Act, was intended to force down the hidden fees that card issuers collect from customers. Researchers led by University of Chicago economist Neale Mahoney found that the law worked as intended, reducing the costs of credit cards -- especially for borrowers with flawed credit -- with no signs of higher interest charges or reduced access to credit.
- Is 18 Too Young for Credit Cards?
MarketWatch 08 Nov 2013
A new study on the credit card behavior of young adults suggests that a provision in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 -- intended to keep many people under 21 years of age from getting a credit card -- was misguided and unnecessary.
- CARD Act Disclosures May Have Little Sway Over Consumers
American Banker 01 Nov 2013
Although the 2009 CARD Act promised clearer disclosures to consumers, such as suggested payment amounts for a card balance and toll-free phone numbers for credit counseling, analysts are questioning whether those requirements have driven borrowers to handle their accounts more responsibly. A September report by several economists calculated that the share of borrowers on track to pay off their balance in 36 months rose by only 0.5 percentage points since the law took effect.
- Credit Bureaus Taking Closer Look at How You Use Your Credit Card
Pittsburgh Post-Gazette 31 Oct 2013
The big three credit bureaus -- TransUnion, Experian, and Equifax -- are putting new information in credit profiles that could help credit card issuers flag low-risk customers. The data will indicate whether a borrower is a "revolver" who carries a balance into each month and incurs interest or a "transactor" who tends to pay off purchase costs in full before the next billing cycle.
- New Tactics Keep College Kids Hooked on Plastic
CNBC News 04 Oct 2013
Since passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, use of credit cards among college students has declined. Debit cards, however, are becoming more common and now are used by nearly 80 percent of students, a survey by Sallie Mae and Ipsos found. Many student ID cards double as debit cards, and prepaid cards are gaining popularity among parents who want to better control their kids' spending. The problem with prepaid and debit cards is that they do not allow students to build a credit record, and they often come with fewer marketing restrictions.
- Chase Scraps Joint Credit Cards
CNN Money 24 Sep 2013
In a move likely to be copied by other banks, Chase has announced it will no longer allow customers to open joint credit cards -- a popular option for couples sharing the responsibility of repayment.
- JPMorgan Fined $389 Million for Deceptive Credit Card Practices
Washington Post 20 Sep 2013
The Office of the Comptroller of the Currency (OCC) on Thursday hit JPMorgan Chase with $389 million in penalties for duping millions of customers into buying expensive and unnecessary services when they signed up for credit cards.